NEW YORK — A September stock rally weakened Thursday as investors were disappointed by a jump in unemployment claims and more signs of trouble for Europe’s economy.
The market got off to a bad start after news that applications for unemployment benefits rose unexpectedly last week. European stocks also sank following a lower reading on business activity in the 16 countries that use the euro and news that Ireland’s economy shrank 1.2 percent in the second quarter.
The Dow Jones industrial average closed down 77 points, its second straight day of losses. The Standard & Poor’s 500 index, the benchmark most often used by professional investors, fell below a key threshold watched by technical analysts.
The slide raised doubts about whether a three-week rally that vaulted stocks higher in September would continue. The Dow is still up 6.5 percent for the month but is 4.8 percent below its 2010 high reached April 26. For the year, it’s up 2.2 percent.
Traders were disappointed to hear that first-time unemployment claims rose last week, breaking a recent trend of declines. The Labor Department said claims jumped by 12,000 and are still at levels that signal employers are not significantly adding new jobs.
“It’s all about jobs right now,” said Jack Ablin, chief investment officer at Harris Private Bank. “When claims pick up, that’s a worrisome sign.”
The Dow Jones industrial average had risen in 13 of the previous 16 days but broke a five-day winning streak Wednesday. Some market watchers are starting to think the rally may have run its course.
The Dow Jones industrial average fell 76.89, or 0.7 percent, to close at 10,662.42. The Standard & Poor’s 500 index fell 9.45, or 0.8 percent, to 1,124.83, falling back below a closely watched threshold of 1,131. The Nasdaq composite index fell 7.47, or 0.3 percent, to 2,327.08.
